BMO Capital Markets revised upward its outlook for the U.S. self-storage industry following second-quarter 2026 results that surpassed expectations, marking the second consecutive quarter of upward revisions.
The brokerage increased its 2026 same-store revenue forecast by 30 basis points to 1.1% year-over-year growth, aligning with consensus estimates while exceeding guidance from major real estate investment trusts (REITs). Net operating income (NOI) projections were raised by 60 basis points to 0.7% growth. Funds from operations (FFO) estimates for 2026 were lifted 10 basis points above Street expectations and 20 basis points above REIT guidance. For 2027, BMO’s FFO estimates trail the Street by 100 basis points, assuming same-store revenue accelerates to 2.1%.
Stock ratings were adjusted accordingly. Extra Space Storage was upgraded to Outperform, replacing CubeSmart as BMO’s top pick. CubeSmart retains its Outperform rating, while SmartStop was downgraded to Market Perform due to heightened caution on Canada, which accounts for 9.4% of the REIT’s NOI.
Operational metrics showed modest demand. Move-in rate growth averaged 1.5% year-over-year in Q2, excluding SmartStop, while Public Storage’s move-in rate turned positive at 1.6%. Negative releasing spreads averaged -28.6%, though lower move-out rates partially offset the impact.
Supply conditions improved. Yardi data indicated third-quarter 2026 in-process supply at 2.4% of inventory, down 30 basis points from the prior quarter. Deliveries are projected to fall 23% year-over-year in 2026, with an additional 17% decline expected in 2027.
Foot traffic data from Placer.ai showed a 0.5% year-over-year decline in the third quarter to date, an improvement from the 1.5% drop recorded in Q2. Housing market weakness continues to constrain demand, while regulatory scrutiny remains a concern amid an election year.
